What Has RERA Done? We Analyse Six Months of RERA in Karnataka

The Karnataka Real Estate (Regulation and Development) Rules-2017 were approved by the State Cabinet and notified on July 10, 2017. Since then, there have been several modifications in the notified rules. To keep our readers abreast of all the changes, in this article we’ve listed the major updates on RERA in Karnataka.

In a recent ruling, the Bombay High Court upheld the constitutional validity of the Real Estate (Regulation and Development) Act (RERA) and its applicability to ongoing projects across states. With this, homebuyers in Karnataka will also be able to challenge the rules that had been diluted to keep most delayed and “ongoing projects” out of RERA’s ambit.

After RERA was introduced in the state, there was lack of clarity as to whether the projects owned by the Bangalore Development Authority and Karnataka Housing Board will come under the ambit of the Act or not.

The housing authorities wanted to keep those out of the ambit as many projects are largely delayed, but there was a notification stating that all projects by these housing development agencies indeed, fall under the purview of KRERA.

The journey so far…

News and numbers

At present, out of the total project applications for registration under KRERA, a total of 916 projects have been granted registration, while about 548 projects are under-process.

Interestingly, the KRERA Authority recently released the first list of unapproved projects. The list was made public on its website under the ‘Applications Rejected’ section.

As per the law, builders have to provide four lists of certificates:

Land Use (Sale Deed or Joint Development Certificate, Khata, Encumbrance Certificate, Sanctioned Plan)
Engineering (NOC from Fire department, Karnataka State Pollution Control Board)
Accounting (report from the directors of the company, balance sheet, IT returns)
Town Planning certificates (building plan)

If the builder is unable to produce these records, they will not get certification from RERA.

As far as the agents’ registrations are concerned, a total of 794 agents have applied for the RERA registration. At present, about 608 agents have been approved by the authority. The broker’s fraternity, since the beginning, felt that the registration fee was much higher in Karnataka when compared to other states. For instance, the registration fee in Maharashtra is Rs 10,000 whereas in Karnataka it is Rs 25,000 for individual brokers.

Major features of the Act

No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building as the case may be in any real estate project or part of it in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under the Act.
Promoters of ongoing projects which have not received the Completion Certificate shall, within the times specified, make an application to the Regulatory Authority in the form and manner as specified in rules.
Within three months of the application for registration of the project with the Authority, promoters are mandated to deposit in a separate bank account, 70% of the amount already realised from allottees, which has not been utilised for construction of the project or the land cost for the project.

Karnataka RERA for agents

The Regulatory Authority will notify the real estate agent on the approval or rejection or rectification of his application.
The Registration Certificate and number will be valid for five years. For renewal of registration, the agent has to provide the updated documents with the fees and apply for the same three months before the expiry of the registration.
The renewal of registration of the real estate agent shall be granted provided that the real estate agent remains in compliance with the provisions of the Act and its rules and regulations.

What are the penalties?

If any promoter contravenes the provisions of Section 3, he shall be liable to a penalty, which may extend up to 10% of the estimated cost of the real estate project as determined by the Authority.
If any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of Section 3, he shall be punishable with imprisonment for a term, which may extend up to three years, or with fine which may extend up to a further 10% of the estimated cost of the real estate project, or with both.

How to file a complaint?

Any aggrieved person may file a complaint with the Regulatory Authority for any violation of the Act or the rules and regulations. The homebuyer would have to file a complaint with the Adjudicating Officer. He would have to provide a fee of Rs 1,000.

Process of filing a complaint online

Success of RERA

In its first ruling under the RERA Act, the Karnataka Real Estate Regulatory Authority asked a developer to refund the booking amount of a little over Rs 9 Lakh to a homebuyer who pursued the builder for a year and made numerous calls.